Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday February 23.
With so many other winning tech stocks, Hewlett Packard (HPQ) stands out as "one gigantic loser." This producer of personal computers and printers has significant debt, and the former CEO executed a poorly conceived buyback of shares at higher prices. Meg Whitman, the new CEO, had a mixed performance at eBay (EBAY), where she seemed unable to take the company to the next level, and sounded too rosy when talking about HPQ's prospects. Cramer doesn't see a turnaround for HPQ; it doesn't seem to have the money or the vision to innovate, and it is getting left in the dust.
There were many success stories on Thursday, including IBM (IBM), which rose over $3, and Procter & Gamble (PG), which seems to have benefited from restructuring. Vivus (VVUS) was the top performer, with an astonishing 77.5% gain on the strength of the FDA approval for its obesity drug. Expectations were not high enough for the company, since the FDA has not approved a major weight loss drug in 13 years. Given the severity of the obesity problem and the strength of the treatment, approval was secured, and Vivus saw an astronomical gain, demonstrating the power of a good speculative stock.
Cramer took some calls:
Procter & Gamble has streamlined, gotten rid of non-performing segments and seems to be making a comeback; "I'm going from a weak hold to a strong buy."
CEO Interview: Marc Benioff, Salesforce.com (CRM)
Salesforce (CRM) has been a pioneer in cloud computing, but the previous quarter was a disappointment, although only one metric was down. Following that report, the stock declined 10% in one day. However, CEO Marc Benioff predicted a better quarter, and his prediction came true. Saleforce recently reported a 3 cent earnings beat, a stronger than expected 38% rise in revenues and deferred revenues, which were weak in November, were up this time by 48%. The company is continuing to make new developments in mobile, social networking and cloud computing. CRM recently closed its transaction with Hewlett Packard, the second biggest deal in CRM's history. Benioff emphasized that the deferred revenue growth was from deals made years ago, and CRM is making more transactions that will result in a major upside. Cramer is bullish on CRM.
CEO Interview: Matthew Roberts, OpenTable (OPEN)
Momentum stocks, which had fallen out of favor in the last half of 2011, seem to be on their way back. OpenTable (OPEN) is adding new restaurants to its online reservation business and is moving into the U.K. and Germany. The stock peaked at $115 last April, and bottomed in November in the low $30s over worries about competition, the discontinuation of its Spotlight program and difficulties integrating an acquisition. OPEN is now up 45% from its lows and may see a significant upside by the increase in reservations made online. Currently only 12% of reservations are made on the internet, but that number should grow to nearly 50%. Gasoline prices don't seem to have an effect on business. Cramer thinks OpenTable has good prospects.
Consol Energy (CNX): The Worst of Both Worlds
Analysts love Consol Energy (CNX); 25 rate it a buy and four rate it a hold. However, Consol is levered to coal which has been a poor performer lately over worries that demand in China might not be as strong as expected and increasing supply from Australia. If President Obama is re-elected, the EPA might add new regulations and taxes on coal. Consol also has natural gas, which has sunk to $2.70, down from $4.50 where Consol bought substantial natural gas assets. Cramer doesn't understand the love analysts have for Consol; he would stay away.
Jim Cramer's Action Alerts PLUS: Trade right alongside a Wall Street pro! Start your 14-day FREE trial today.
Get Cramer's Picks by email - it's free and takes only a few seconds to sign up.